The spread, or price difference, swelled 3.01 cents to
84.34 cents a gallon, based on September contracts for the motor
fuel and biofuel. The corn crush spread, or the difference
between a bushel of corn and a gallon of ethanol, increased to
41 cents from 37 cents yesterday, data compiled by Bloomberg
show.

“We’ve got too much pressure in the corn and that’s
spilling over into ethanol,” said Mike Blackford, a consultant
at Intl FCStone in Des Moines, Iowa.

Denatured ethanol for September delivery rose 0.2 cent to
$2.185 a gallon on the Chicago Board of Trade. The August
contract, which expires Aug. 5, slumped 0.5 cent to $2.289.

Gasoline for September delivery increased 3.21 cents, or
1.1 percent, to $3.0284 a gallon on the New York Mercantile
Exchange. The contract covers reformulated gasoline, made to be
blended with ethanol before delivery to filling stations.

Ethanol is produced from corn in the U.S., with one bushel
making at least 2.75 gallons of the renewable fuel.

Refiners are required to use the additive to meet federal
mandates. The government attaches Renewable Identification
Numbers, or RINs, to each gallon of the biofuel to track
compliance.

Production Slips

The Energy Information Administration said yesterday that
ethanol production fell a third week to 832,000 barrels a day in
the week ended July 26, while stockpiles sank 4.7 percent to
16.5 million barrels, the lowest level since July 5.

Imports declined 68 percent to 13,000 barrels a day, said
the EIA, the Energy Department’s research unit.

Corn for September delivery decreased 11.5 cents, or 2.3
percent, to $4.875 a bushel in Chicago. The more-actively traded
December contract tumbled 12 cents to $4.67.

Blackford said supply of the grain could become scarce as
the September harvest nears, forcing some ethanol companies to
idle operations and perform maintenance.

In cash market trading, ethanol rose 9 cents to $2.465 a
gallon in New York, 10 cents to $2.35 in Chicago, 12 cents to
$2.44 on the U.S. Gulf Coast and 0.5 cent to $2.485 on the West
Coast, data compiled by Bloomberg show.

West Coast ethanol’s premium to the Gulf tightened 11.5
cents to 4.5 cents, the smallest since July 18, while Chicago
discount to New York Harbor narrowed 1 cent to 11.5 cents, the
thinnest since July 26.